iQIYI Reports Q2 2025 Revenue Decline and Lower Non-GAAP Profit

iQIYI (IQ.US) announced its Q2 2025 financial results, reporting total revenues of RMB6.63 billion (US$925.3 million), an 11% year-over-year decrease. The company posted a non-GAAP net income attributable to iQIYI of RMB14.7 million (US$2.0 million), a significant decline from RMB246.9 million in Q2 2024. Non-GAAP diluted net income per ADS was RMB0.02 (US$0.00), falling short of the analyst EPS estimate of -US$0.02.

Revenue Performance Across Segments

Total revenues decreased by 11% year over year, primarily driven by declines in membership services and online advertising. Membership services revenue fell 9% year over year to RMB4.09 billion, attributed to a lighter content slate compared to the previous year. Online advertising services revenue also saw a 13% year-over-year decrease to RMB1.27 billion as some advertisers adjusted strategies due to macro pressures.

Content distribution revenue experienced a substantial 37% year-over-year decrease to RMB436.6 million. This decline was primarily due to a reduction in barter transactions and, to a lesser extent, cash transactions. In contrast, other revenues increased by 6% year over year to RMB829.3 million.

Operational Efficiency and Profitability

Operating loss for the quarter was RMB46.2 million (US$6.4 million), compared to an operating income of RMB342.1 million in Q2 2024. Non-GAAP operating income decreased significantly to RMB58.7 million (US$8.2 million) from RMB501.4 million in the prior year, with the margin dropping from 7% to 1%. Despite revenue declines, the company managed to reduce its cost of revenues by 7% year over year, primarily due to a lighter content slate.

Selling, general, and administrative expenses decreased by 1% year over year to RMB959.6 million, and research and development expenses saw a 6% year-over-year decrease to RMB421.9 million. Total other expense decreased by 74% year over year to RMB61.9 million, mainly due to a gain from foreign exchange. Net interest expense has also consistently declined for seven consecutive quarters.

Management Commentary and Strategic Focus

Mr. Yu Gong, CEO of iQIYI, highlighted the company's strong performance in content delivery, securing the top market share in total drama viewership with recent blockbusters. The company is strategically investing in key growth areas, including AI applications, micro dramas, experience business, and global expansion, aiming for sustainable long-term success. Mr. Jun Wang, CFO, emphasized effective resource management and capital structure optimization, which is better positioning the company for long-term value creation.